Bored Ape’s Yuga Labs Faces Investigatory SEC Probe

The Alpha:

  • As per a Bloomberg report, Yuga Labs is currently facing an investigation from the United States Securities and Exchange Commission (SEC) on the legality of the sales of its high-value NFT offerings.
  • Most notably, that includes pieces from the renowned Bored Ape Yacht Club collection that’s turned PFP NFTs into a Web3 household name.
  • Best-known in the NFT space for creating the Bored Ape Yacht Club NFT collection, Yuga Labs has used the success of its flagship project to build a burgeoning media empire, spanning endorsements from major sports leagues, high fashion brands, and even a metaverse-ready gaming experience.
  • This investigation has not been spurred on by wrongdoing on the part of Yuga Labs, and is instead meant to serve as a way that policymakers and regulators can “learn more about the novel world of Web3” as mentioned by a Yuga Labs spokesperson in the Bloomberg report.

Why it matters

The focus of the United States Securities and Exchange Commission’s (SEC) investigation into Yuga Labs is to determine if the various digital assets it currently has up for sale are in violation of federal law. That includes the Bored Ape Yacht Club NFT collection, its derivative NFT collections, and ApeCoin, the BAYC community’s proprietary cryptocurrency. This investigation follows a worldwide trend towards greater regulation in the crypto and NFT spaces.

But why look into Yuga Labs specifically? When the Bored Ape Yacht Club NFT collection first burst onto the scene in 2021, it arguably drove most of the hype that saw NFTs make their first big steps into the mainstream conversation. Thanks in part to how celebrities plastered these high-ticket NFTs onto their social media platforms, the NFT market’s 2021 bull run had something of a moment in wider pop culture. Into 2022, and despite the ongoing bear market, we’re starting to see the seeds planted by Yuga Labs sprout via the various ways that Bored Ape holders have been commercializing their prized NFTs.

Of course, all this continued buzz has to come at a cost. Yuga Labs’ exponential growth into one of the internet’s premier brands has understandably led to the company being placed under a more watchful lens of scrutiny. After weathering a PR storm that saw a user drumming up baseless allegations toward its founders, now Yuga Labs has the SEC on its back.

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